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So I've just finished reading a Christmas present, Hubbert's Peak: The Impending World Oil Shortage (see http://www.amazon.com/exec/obidos/ASIN/0691090866/qid%3D1009549006/ref%3Dsr%5F11%5F0%5F1/002-7037123-9275228). The author's claim is that between 2003 and 2009 (at the very optimistic outside), global oil production will reach its peak. Thereafter, demand outstrips supply, and prices rise rapidly.

The author was persuasive, at least to me. I'd welcome a discussion as to whether his analyses are sound, but for this forum, I'd like to assume that they are, and to ask what happens in a Gorilla Game context.

1. What happens to current Gorilla Games when energy prices rise dramatically? (By "dramatically", let us assume for sake of argument that I mean, at least US$2.50/gallon for gasoline and $.20/KWH for electricity.) For instance, will INTC and AMD suddenly find themselves competing more on the power efficiency of their chips than clock speeds? (Will ARMHY find even more applications for their relatively power-stingy processors?)

2. What new Gorilla Games (or Royalty Games, if that's easier to speculate about) might arise? For instance, does the high price of petroleum encourage a faster move to alternative automotive technologies, like fuel cells? How about solid-state lighting (CREE or others)? What software Games might arise?

I'm curious, and (for the moment :-) only mildly alarmed. --FY
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If it is managed efficiently, alternative energy will (such as fuel cells, wind, and solar, etc.) make up the shortfall in the long run. In the near future, there is no need to worry as Russia is pumping oil like there is no tomorrow (we need their oil, they need our money), ie "But Putin's Russia would have none of it. The world's second largest oil exporter gave OPEC the back of its hand, making it clear that it had no intention of reducing or even slowing the growth of its oil production, whatever the price impact. Indeed, Russian oil shipments are growing faster than any other country outside OPEC, increasing by 530,000 barrels daily — or nearly 10% this year — with another 350,000 barrel increase projected for next year."
see http://www.nationalreview.com/kudlow/kudlow101201.shtml LifeForceDancer
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If it is managed efficiently, alternative energy will (such as fuel cells, wind, and solar, etc.) make up the shortfall in the long run. In the near future, there is no need to worry as Russia is pumping oil like there is no tomorrow (we need their oil, they need our money), ie "But Putin's Russia would have none of it. The world's second largest oil exporter gave OPEC the back of its hand, making it clear that it had no intention of reducing or even slowing the growth of its oil production, whatever the ...

Correct me if I'm mistaken. First, I believe Putrin has since changed his stance and has bowed to OPEC. Second, alternated petrol energy will not be competive until gasoline sells for > $5/gallon. It sells for that and more in most of the world. Certainly Europe has many qualified to find an alternative but still uses the stuff.

TB
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The author's claim is that between 2003 and 2009 (at the very optimistic outside), global oil production will reach its peak. Thereafter, demand outstrips supply, and prices rise rapidly.

Anyone remember the Club of Rome? A group of intellectuals in the 1960s and 1970s that the mainstream media loved to cover. They predicted the depletion of oil by 2000, shortage of materials, starvation around the world as population ran wild, etc.

Not covered was one somewhat laughed at non-"liberal" intellectual (by "liberal" I define as people who do not believe that human beings act in their own self-interest and can modify their behavior dynamically as circumstances and environment change)and I can't even remember his name, who bet one of the leaders of the Club of Rome that ten years later commodity prices would all be lower (not higher as shortages would imply).

Guess who was right by a large margin. Guess who is even more right today. But why retract and admit your wrong.

As for oil supplies. Saudi Arabia, alone, has more oil in its fields than it has drilled out. This is oil that is drillable today, not requiring future advances in technology. We are not running out of oil. In fact we would seem to have more viable oil reserves in the world today then we had 20-30 years ago. It is called the advancement of technology in this field.

But in any event, these apocalyptic sort of predictions have been around since Malthus whose economic theory is basically one of excess population eventually starving themselves, population dying out, and the whole thing starting over again until excessive population is again reached.

Well, if you want to equate humans to animals, as animals seem to follow this law, that is fine. But humans have this unique ability to dynamically modify behavior to work around this Malthusian problem that liberal intellectuals have been espousing every few decades for the last few hundred years. To me it seems essentially an elitist argument that the "'dumb fecund masses' are not capable of governing their behavior to overcome changes in their environment." Geez, and how did we survive the thinning of the rain forests, the mass escapes across deserts, the thousands of years lived in an ice age, the coming and going of new predators, et al. I guess those "dumb fecund masses" have some ability to adapt, eh?

As for oil it is called substitution. All of our current oil crises are caused by political, not material, shortages. Any future shortage of oil will be felt in long-term sustainable price rises which will cause consumption to go down as substitution is used to fill the gap. One reason, for example, that the Club of Rome was so wrong is because substitution materials were found. As an example, how much steel do you think is actually in automobiles these days? Not a whole lot when compared to 30 years ago. Thus a steel shortage was really irrelevant. The same goes for practically every other commodity in the world. Human adaptability and technological advancement, when allowed to freely exist (ie, when not restricted by tyranny) is amazingly effective.

But yes, it will create investment opportunities into these substitution energy sources. Fuel cells are currently the rage, as is hydrogen production. Powerchips and Silicon Carbide as well. Better energy management through the likes of Echelon, is also another possible, and viable solution. All of these will start to come into the economy as the technology develops and as substitution becomes necessary. The real big problem (other than things like powerchips who pay for themselves today, but most are not technologically mature enough yet for the mass market) is when will substitution become necessary? I don't see material shortages coming very soon. The only thing that will cause the need for substitution is political shock (whether we impose a burdensome BTU tax (al-lah Al Gore), or war breaks out in the Middle East oil fields).

Tinker
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Russia is not beholding to OPEC in any way, and nations outside of OPEC tend to cheat the most. The amount of untapped oil in the world is staggering. Putin and Bush got along because we need the oil of the number two exporter of oil and Russia needs our money. Russia is loathe to strictly follow the Occident in oil policy especially as the former Soviet Union had major problems with its indigenous Moslem populations.Also, alternative energy has just started to be competitive. For instance, it costs about eight cents per kilowatt for residential energy. Wind turbines efficiency has improved immensely so that each wind turbine that takes one quarter of an acre can produce electricity for half the cost (four cents). There was not enough wind in Europe for this to be profitable in Europe back then; it is a different story in the USA Midwest "Tornado Alley" and the "Windy City" of Chicago. Right now on the Oregon/Washington border seventy thousand customers are being supplied with wind power. Also, in Odessa, Texas about seventy thousand customers are being supplied by wind power. It is estimated that North Dakota by itself could supply one third of the entire nation's energy needs through wind power. Central South Dakota in what is being called operation "Rolling Thunder" Will have hundreds of wind turbines which are a good deal for farmers too as farmers would receive two thousand dollars annually for royalties for each turbine. Fuel cells are due to come out by GM and others by 2004. Iceland as a country runs almost entirely on hydrogen fuel cells. Solar power in states like Arizona and New Mexico will be viable within a decade. And we have not even begun to talk about nuclear power plants, ie Japan gets much of its electrical power from about fifty nuclear plants. There really is no reason for the USA to be caught up in the backwaters of the Middle East. LifeForceDancer
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'...As for oil it is called substitution. All of our current oil crises are caused by political, not material, shortages. ..."
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"As for oil it is called substitution. All of our current oil crises are caused by political, not material, shortages. """


Tinker is as cynical as rat is?....maybe?....now if we can figure out who "they" are?..we can get a handle on the grassy knoll and the single bullet theory once and or all.....t-rat
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It's really hard to get a firm handle on the oil supply. There doesn't seem to be any doubt that older producing fields are experiencing declining output, but new fields keep being discovered. Thirty years ago I thought that putting some money into a mutual fund that specialized in oil would be a smart move, because *obviously* we were running out of oil. Well, that didn't pan out. I came to understand that new fields kept being discovered, and nobody could predict when that process would stop. I would wait another 30 years before getting too excited about it. The following is from last years Scientific American.

There's plenty of cheap oil, says the U.S. Geological Survey

The debate over this summer's skyrocketing gasoline prices-an issue that has drawn the ire of both U.S. presidential candidates, Congress and the Federal Trade Commission-obscures what may be a larger truth: there's gobs of oil out there.

In June, after a five-year study, the U.S. Geological Survey raised its previous estimate of the world's crude oil reserves by 20 percent, to a total of 649 billion barrels. The USGS team believes the largest reserves of undiscovered oil lie in existing fields in the Middle East, the northeast Greenland Shelf, the western Siberian and Caspian areas, and the Niger and Congo delta areas of Africa. Significant new reserves were found in northeast Greenland and offshore Suriname, both of which have no history of production. "What we did is look into the future and predict how much will be discovered in the next 30 years based on the geology of how it gets trapped," explains Suzanne D. Weedman, program coordinator of the USGS World Petroleum Assessment 2000. "We also believe that the [oil] reserve numbers are going to increase."


http://130.94.24.217/2000/0900issue/0900scicit4.html

At this link you will find a link to a 1998 article article The End of Cheap Oil, that paints a bleak picture. Who ya gonna believe?
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And we have not even begun to talk about nuclear power plants, ie Japan gets much of its electrical power from about fifty nuclear plants.

And for some 30 years we have not built a new nuclear plant. How much better would our power situation be if we had been able to build them. No, I don't want to get into an argument about safety of nuclear power and I agree that disposal is a BIG problem. But, the nuclear power industry (ours) has a safety record that is getting very hard to beat.

(BTW - I still like the Microwave power from space stations in SimCity games and their tendency to wander.)
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So I've just finished reading a Christmas present, Hubbert's Peak: The Impending World Oil Shortage
The author was persuasive, at least to me. I'd welcome a discussion as to whether his analyses are sound


I'm quite sure it is not correct. I can't go into ALL my reasons for thinking this, but here are two excellent articles on the topic, the first one specifically addressing the arguments of this book.

Max

Sunset for the Oil Business?
The Economist, published on 11/01/01 , rated 4 by our experts.
A look at both sides of the debate over whether world oil production has or is about to peak. The people at the Oil Depletion Analysis Centre (ODAC) paint a far more pessimistic picture than other groups, arguing that we have peaked and will experience an oil shock induced by scarcity. From the article it seems clear that their prediction is unlikely to be correct, since it extrapolates invalidly from one earlier more specific prediction about U.S. production by M. King Hubbert. Other groups, such as the American Geological Survey and ExxonMobil see “Hubbert's Peak” as far off, based both on what is currently known and the continuation of technological progress. ODAC misleadingly relies on current estimates of how much “ultimately recoverable” oil is below ground, when that number is really a dynamic one as extraction processes continue to advance. In the end, like so many wrong past pessimists over the centuries, the ODAC view seems to result from a blinkered view of the future that ignores the roles both of economics and technological progress.

http://www.economist.com/science/displayStory.cfm?Story_ID=842272


Into deeper water
Dec 6th 2001, The Economist

Oil exploitation: The world's apparently unquenchable thirst for oil is fuelling a boom in exotic kinds of exploration technology for use in much deeper waters
http://www.economist.com/science/tq/displayStory.cfm?Story_id=885090

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and I can't even remember his name, who bet one of the leaders of the Club of Rome that ten years later commodity prices would all be lower (not higher as shortages would imply).

That was the brilliant (and sadly deceased Julian L. Simon). He bet against ultra-doomsayer Paul Ehrlick. When Simon won the bet, he offered to renew it for another ten years. Ehrlick refused. I can't recommend his books highly enough, such as The Ultimate Resource 2 for a start.
http://www.amazon.com/exec/obidos/ASIN/0691003815/ref=pd_sim_books/107-9592733-5977331

The State of Humanity
http://www.amazon.com/exec/obidos/ASIN/155786585X/ref=pd_sim_books/107-9592733-5977331

Another excellent and very recent book is The Skeptical Environmentalist.
http://www.amazon.com/exec/obidos/ASIN/0521010683/ref=pd_sim_books/107-9592733-5977331

Max

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A clip from Frobes mag.

http://www.forbes.com/forbes/2002/0107/126.html

"At today's gasoline prices, the nutty ideas to improve auto efficiency don't make economic sense. Spend $4,000 more on a car to save $104 in fuel?"


Enjoy,

Happy New Year to you all.
Dennis

Can anyone say Oil Cartel!
car·tel (kär telÆ), n.
1. an international syndicate, combine, or trust formed esp. to regulate prices and output in some field of business.

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Don't get me wrong, I'm not complaining; this is a pretty interesting thread.

I suppose, in a sense, oil is an open proprietary standard.

== dj
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